Allana Potash Corp (CVE:AAA) (PINK:ALLRF) provided an update on the ongoing drilling in Haro concession, but the share price failed to explode beyond previously set resistances.
On Monday, Allana stated to have intersected two potash mineralization zones in the drill hole DK-10-08, proving the existence of potash at shallow depths. Mineralization levels were similar to those intersected at the hole DK-10-07, which was announced earlier this month. The company plans to continue drilling more holes to confirm the full potential of the property, so these updates should become frequent.
AAA stock is struggling to sustain the uptrend despite the heavy trading volumes. Resistance at roughly $1.15 has been challenged once again. However the attempt failed like the last time leading to increase in volatility and uncertainty. This hesitation may trigger a large scale profit taking, which often results in equivalently large price drops.
The market cap is fairly high for a company with only $14 million in net tangible assets. For the most part the share price is inflated on expectations that relate to Allana’s most prominent potash property. The stock is also following the general market sentiment, which currently favors all the potash related companies due to the recent large scale acquisitions in the sector.
Without the potential value of their properties the company doesn’t look that attractive. The underlying financial reports show the company constantly issues new stock to raise working capital. No revenues from business activities have been recorded yet, which should also limit the share price growth and keep it closer to the tangible value of the company.
